Business gains a friend: Congress

Fresh from big election gains, Republicans who will take control of the House pledge less government involvement in the private sector and more scrutiny of new regulations. Obama promises a change in approach.

Reporting from Washington — The Republicans' big election gains will make the new Congress more business-friendly, with incoming leaders in the GOP-controlled House pledging less government involvement in the private sector and more scrutiny of new regulations.

President Obama also appeared to get the message, promising Wednesday to change his approach on business issues after his party took what he called a "shellacking" by voters.

He signaled he was ready to compromise on a temporary extension of the Bush-era tax cuts — a major concern for many businesses. And he acknowledged that he had not found "the right balance" between increasing regulation to protect consumers and setting "the right tone publicly" to encourage businesses to expand.

"There's no doubt that when you had the financial crisis on Wall Street, the bonus controversies, the battle around healthcare, battle around financial reform, and then you had [the] BP [oil spill], you just had a successive set of issues in which … business took the message that well, gosh, it seems like we may be always painted as the bad guy," Obama said at a news conference.

"And so I've got to take responsibility in terms of making sure that I make clear to the business community, as well as to the country, that the most important thing we can do is to boost and encourage our business sector and make sure that they're hiring."

Changing the rhetoric will be easier than passing legislation. Although Republicans took the majority in the House, Democrats still control the Senate and the White House.

Business desperately wants the tax cut extension and approval of foreign trade agreements, but a legislative stalemate on other issues wouldn't be all bad, said Bruce Josten, the chief lobbyist for the U.S. Chamber of Commerce.

"Sometimes 'no' is a good answer," said Josten, whose organization pledged to spend up to $75 million this year to elect more business-friendly candidates. "Gridlock has always proven to be more effective at reducing government spending and deficit than anything else."

Rep. John A. Boehner (R-Ohio), who is expected to become House speaker when Republicans formally take control in January, said Wednesday his party would "renew our efforts for a smaller, less costly and more accountable government."

The Bush-era tax cuts expire at the end of the year unless Congress acts. Republicans want to extend them all, while Obama wants to allow the cuts to expire for joint filers earning more than $250,000 a year.

About 3% of businesses that file personal returns, which account for about half the business income reported individually, would be hit with a tax increase under the Obama plan. Republicans and business groups have said the uncertainty over the extension of the tax cuts has hindered new hiring.

Boehner said Republicans "continue to believe that extending all of the current tax rates for all Americans is the right policy for our economy at this time."

Obama and Senate Majority Leader Harry Reid (D-Nev.) said they were open to a deal, with the priority to keep tax rates on average Americans from going up Jan. 1.

Obama said he wanted to meet with Republican and Democratic congressional leaders in the next few weeks. He wants to reach an agreement "that extends those tax cuts that are very important for middle-class families [and] also extends those provisions that are important to encourage businesses to invest, and provide businesses some certainty over the next year or two."

Boehner has called for repeal of the healthcare reform law and the overhaul of financial regulations. But analysts said wholesale repeal of either is highly unlikely given Democratic opposition.

Even so, Boehner said House Republicans would increase their oversight of the administration, specifically pointing to the hundreds of new rules being drafted by regulators under the financial reform law.

Such oversight, which would slow the rule-writing process, "is important so that not only will the Congress understand but the American people will understand just what this bill will do to our financial services industry," he said.

Wall Street has been pounded by Democrats for its role in the financial crisis. Obama derided executives as "fat-cat bankers" last year and proposed a new tax on the 50 largest financial institutions to recoup projected losses in the $700-billion bailout fund. The financial overhaul enacted the most sweeping tightening of regulations on the industry since the Great Depression.

But the major players in pushing the legislation into law will be out of power next year. Analysts already predict the new bank tax is dead with the Republican gains.

Rep. Spencer Bachus (R-Ala.) is in line to supplant Rep. Barney Frank (D-Mass.) as chairman of the House Financial Services Committee, but Rep. Ed Royce (R-Fullerton) said Wednesday that he also would seek the post. Both fought hard against the financial overhaul.